It takes a lot to dispel my natural optimism and enthusiasm, but Bank of England chief economist Andy Haldane‘s recent comments about advisers not understanding pensions sent my heart into my boots.
We have all worked so hard to improve the professionalism of financial services and great strides have been made, starting with the RDR back in December 2012. We have created an industry that is highly qualified, knowledgeable, transparent and focused on clients’ best interests. However, it seems like it was all for nothing. If Haldane thinks we are clueless, what chance is there of the rest of the population trusting in our judgement?
Trust in the finance sector was one of the main themes of Haldane’s speech; his focus being on the “great divide” between the man on the street and the big financial institutions. However, what he seems to have failed to appreciate is that regulated advisers are key to closing that divide. We are uniquely placed to deliver a personal one-to-one service, building strong, long-lasting relationships with clients and ensuring their understanding of any financial decisions to be made.
The comment that it is the individual that shoulders the risk in financial decision-making is a valid one – for the unadvised consumer. Our role as advisers is to help mitigate that risk and, through the regulated advice process, ensure the management of levels of risk, providing the safety net of the Financial Ombudsman Service and Financial Services Compensation Scheme.
I appreciate the point Haldane was trying to make about the complexity of pensions and, yes, they have become hugely complicated for the layperson. But this is why the adviser community is so important. They say that pension legislation is now the equivalent of three bibles and it would seem the Chancellor has yet more changes up his sleeve for future Budgets.
Changing legislation remains one of our greatest challenges as new rules bring new vulnerabilities for clients. Making new concepts work at ground level, recognising new conflicts in existing financial strategies and protecting clients from rash decisions prompted by tabloid headlines are part and parcel of what we do.
Maybe one day governments will talk to those at the sharp end about their planned legislation before it becomes law. As an advice community, it is critical that we engage with adviser groups such as Apfa: its role in lobbying both the FCA and the Government is the best way to ensure our voice is heard.
I am sad that Haldane has been unlucky in his choice of advisers and experts. If the people he knows do indeed have no clue about pensions, they have no place in our sector. Regulated advisers are required to keep up to date with all changes and we invest huge amounts of time and money into the ongoing training and competence of our client-facing teams. Sorry, Mr Haldane, but you are so wrong: we do understand pensions and you may have done us untold harm by suggesting that we do not.
Carl Lamb is managing director of Almary Green